Labor Supply of Husbands and Wives: A Simultaneous Equations Approach
Review of Economics and Statistics
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... supply functions for married men and women are formulated as a dynamic simultaneous equations system, which is estimated using panel data. Controlling for fixed individual effects allows marginal labor supply responses to be disentangled from permanent patterns in hours worked due to assortative mating. The results suggest that the labor supply of husbands and wives without pre-school children is not jointly determined in the short run, while families with young children exhibit strong interactions in work hours and negative crossearnings effects. Neither the joint utility model of family labor supply nor an ad hoc "traditional family" model is supported by these results.